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Grand jury questions pay of officials in 3 O.C. cities

A first-of-its-kind report by the Orange County Grand Jury questioned whether top officials in three upscale cities -- Laguna Hills, Newport Beach and Laguna Beach –- are paid too much.

The report was commissioned in the wake of questions over city employee compensation fueled by last year’s salary scandal in Bell, where top officials were earning salaries as high as $787,000.

The grand jury found no salaries in the 34 cities surveyed that the panel considered “abusive.” The three cities were singled out because they appeared to be paying more than most Orange County cities.

In the case of Laguna Beach and Newport Beach, the grand jury questions what it said was a large number of employees earning $100,000 or more. Laguna Beach, with a population of about 25,000, had 22 such employees, and Newport Beach, with a population of about 86,000, had 60. The grand jury found that the two cities had more high-paid workers per capita that other cities.

Officials in Laguna Beach and Newport Beach disputed the findings. They said that although their cities’ populations may be smaller than others, they are both “full-service” cities, meaning that they use city employees for services that other cities contract out. Both are also coastal cities with tens of thousands of tourists creating an added demand on services.

“I think [the report’s conclusions] were a bit misleading,” said Laguna Beach City Manager John Pietig. “To do an analysis like this without comparing the services is really an apples to oranges comparison.”

The grand jury also singled out the compensation of Laguna Hills City Manager Bruce Channing –- a total of about $378,000, including benefits –- as higher than the norm. The average total compensation for a city manager was $281,699 with benefits, and the average base salary was $207,808. (A Times analysis last year found the average taxable compensation for a city manager in L.A. County was $210,000).

It’s not the first time Channing’s pay has been scrutinized. Last year, Laguna Hills Councilwoman Barbara Kogerman, who was then a candidate, engaged three graduate students to help her compare the compensation of Orange County city managers and reported that Channing was the highest-paid.

Channing makes about $233,000 in base salary, but Kogerman’s report calculated his total earnings as $460,000 with benefits, bonuses and extras. Channing disputed their methodology. Although the grand jury came up with a different figure, Kogerman said the report vindicates her findings.

“Basically, it confirmed what I reported, which is that some of this may not be abusive, but it is excessive,” she said.

As well as salary, the grand jury added deferred compensation and pension contributions, bonuses, health and life insurance premiums, auto allowance and cashed-out vacation time to calculate total compensation. It did not include some items Kogerman had counted as compensation, including a $60,000 car the city bought for Channing to use.

With the grand jury’s lower figure, Channing still had the highest total compensation figure of any city manager in the county, although other city managers made more in base salary.

“It is clear that this is a substantial compensation level,” the report noted, adding that the chief executive officer for the Orange County received total compensation of $324,535.

Channing, who has worked for Laguna Hills for 20 years, said in an interview Monday that his salary is in line with other city managers with the same level of experience.

The total reported for Channing included a one-time payment of $30,000 for unused vacation time. Channing said his reported compensation is also boosted by the fact that the city funds post-retirement health benefits through a retiree health savings account, which means higher compensation figures while the employees are working but no liability after they retire.

“I think I’m right in line with city managers of comparable tenure and experience,” he said.